Decentralized Leadership: A new idea with a long history

What is decentralized leadership?

Technological and social change are driving the need for new leadership models in the workplace. The basic principle of decentralized leadership is not a new idea, but changes in technology and social attitudes can reinvigorate a concept with a long history.

Decentralized leadership aims to distribute power and decision-making capability across organizations and teams instead of concentrating decision-making amongst a small group of senior leaders. Instead of a traditional pyramid structure, a decentralized approach shares this approach spreads decision-making across all levels of an organization.

Examples of decentralization at work

In a company with a more decentralized leadership model, individuals might be responsible for their own training and development budgets. Instead of mandated training, each employee has an annual training stipend to spend on whatever type of learning and training they want. They might spend it on language classes, conference attendance, university short courses or part time programs, or developing their own skills. The more a firm is decentralized, the more autonomy and independence everyone has in choosing how to manage themselves.

This can be applied to all types of decision-making. A team member could propose and lead a project based on their expertise, rather than waiting for approval from senior leadership. This method encourages innovation by giving employees the freedom to explore new ideas and take initiative, which can lead to faster problem-solving and a more dynamic, flexible organization.

This doesn’t mean it’s a free-for-all. Each employee is not working in isolation: everything must be tied back to the key goals, purpose or vision of the organization. But higher levels of decentralization mean employees have more control over how their own work contributes to that vision.

Decentralized leadership is not a new concept.

Since the 1950s, the discussion around decentralization has seen a marked growth, reflecting a broader shift in how societies, economies and workplaces understand and implement the distribution of power and control. This trend has accelerated in the last 15 years with advancements in computing and the rapid growth of blockchain technology and decentralized ledgers.

There has long been an interest in decentralization, but continuous technological advances have made large, globally distributed and decentralized systems possible to organize across borders, time zones, offices, teams and computing networks in ways that were never before possible or practical.

A new term with a long history

Over the years, various concepts have emerged and evolved. Some have not moved far beyond corporate buzzwords, while others have had some levels of uptake, each with differing levels of adoption and effectiveness. These include:

• Holacracy: This model focuses on defining clear roles rather than fixed job titles, aiming to distribute authority and decision-making throughout the organization. It's structured around self-organizing teams rather than a traditional hierarchy, encouraging autonomy and flexibility.
• Flat Organizational Structures: Characterized by few or no levels of middle management between staff and executives, this approach promotes open communication and quick decision-making. It works well in smaller companies with a core purpose, but becomes difficult in larger organizations.
• Distributed Leadership: Proposes the sharing of leadership responsibilities among various members of an organization, not confined to those in formal management positions. It supports a collaborative environment where leadership is a dynamic role played by different people at different times.
• Servant Leadership: Prioritizes the needs of employees and encourages leaders to serve their teams, fostering a culture of respect, empathy, and the commitment to support the personal and professional growth of team members.
• Participative Leadership: Involves team members in the decision-making process, ensuring their voices are heard and considered. This leadership style supports a democratic approach to management, enhancing employee engagement and motivation by valuing their input and ideas.

While autonomy is often celebrated in effective workplaces, it is not the only factor that contributes to success, and it is not necessarily a driver of productivity in isolation. In environments lacking clear strategy, direction, and accountability, even the most capable individuals and teams can find themselves feeling lost and ineffective.

It is crucial to strike a balance in leadership: providing enough direction to guide and motivate, while still allowing enough autonomy to encourage innovation and personal responsibility. Without this balance, organizations risk creating an atmosphere where employees, despite their potential, feel directionless and unable to contribute effectively to the team or organization's goals.

Decentralization alone isn’t enough

Decentralized leadership can change traditional hierarchies, placing a higher emphasis on the autonomy and accountability of team leaders. This shift allows leaders to tailor schedules, working hours, and team meetings to their group's specific needs, promoting a sense of ownership and responsiveness.

At the individual level, this structure empowers team members to seek clarifications, set personal performance goals, and engage more actively in their roles. While decentralized structures can promote autonomy, this approach demands a higher level of self-management, which can also be more challenging, stressful and people may have more difficulty coping when they make mistakes or plans go badly.

Cross-department collaboration becomes crucial in a decentralized environment. The lack of top-down directives means teams must find new ways to communicate and collaborate, necessitating structured and spontaneous interactions across the organization to maintain cohesion and promote innovation.

Clear performance management is also vital, defining specific responsibilities and goals for individuals and teams. This clarity helps align efforts with organizational objectives, ensuring accountability and facilitating assessment of progress on various time scales.

Finally, a strict approach to performance issues is essential. Underperformers or those negatively impacting team dynamics require proactive and direct management. While support for improvement is critical, there must be clear policies for addressing persistent issues, providing opportunities to succeed but also taking rough decisions and letting people go who cannot succeed in a decentralized environment and those who are not able to work well with others. Some people work better in structured environments with clearly delineated chains of command, and more traditional managerial structures.

The confluence of good tech and people management

As tech companies and other sectors increasingly adopt decentralized and geographically distributed models of operation, there's a growing need for digital communication and collaboration tools that bridge geographic and social divides. Successfully leading and managing in decentralized working environments and with decentralized leadership principles requires a new set of tools (both technical, and social) that support remote collaboration and autonomy, ensuring that very worker has a strong foundation for future success.

And that means building strong and effective relationships across digital spaces, as well as finding the right tech that makes communication and collaboration easier.

References

Top of FoCara-Lynn Scheuer, Voltan, A., Kumanan, K., & Chakraborty, S. (2023). Exploring the impact of decentralized leadership on knowledge sharing and work hindrance networks in healthcare teams. Journal of Management and Organization, 29(1), 139-158. https://doi.org/10.1017/jmo.2020.37

Di Bona, G., Bracci, A., Perra, N., Latora, V., & Baronchelli, A. (2023). The concept of decentralization through time and disciplines: A quantitative exploration. EPK Data Science, 12(42). https://doi.org/10.1140/epjds/s13688-023-00418-1.

Levenson, A. (2020). Decentralizing your operating and talent models the right way. MIT Sloan Review.

Silva, Emilson C.D. (2016). Decentralized Leadership, CESifo Working Paper, No. 6064, Center for Economic Studies and ifo Institute (CESifo), Munich.